Comprehensive Online Bidding and Sales Management System for Merchant Processing Services

ABSTRACT

A comprehensive online bidding and sales management system and method for merchant processing services of global credit card transactions. Merchants using the system can obtain multiple bid proposals for merchant processing services from sales representatives that are automatically ranked by the system based on the best overall price (estimated monthly expense to merchant) and feedback provided by merchants using the system. The merchant is thus provided with an estimated monthly expense and bid ranking associated with each bid proposal. The system provides the sales representative with its estimated revenues and processing expenses, and provides various merchant processing pricing models to the sales representative to analyze its bid proposals and merchant sales opportunities.

CROSS-REFERENCE TO RELATED APPLICATIONS

This application is a continuation of, and claims the benefit under 35U.S.C. §120 of the earlier filing date of, copending U.S. patentapplication Ser. No. 12/818,210 filed on Jun. 18, 2010.

BACKGROUND OF THE INVENTION

1. Field of the Invention

The invention relates generally to a comprehensive online bidding andsales management system for merchant processing services of globalcredit card transactions including Visa, MasterCard, Discover andAmerican Express.

2. Background of the Invention

Merchant processing services are well known in the art and generallyrefer to services that process electronic credit card transactions onbehalf of merchants, such as consumer credit card, pin debit card,signature debit, commercial card, business card, prepaid and reward cardtransactions. Similar transactions could involve gift cards, privatelabel cards, and electronic check transactions.

Merchant processing services are offered by various merchant acquirers,financial institutions, independent sales organizations (ISO), memberservice providers (MSP), or other third party processors.

A merchant that accepts credit cards as payment for goods or serviceswill have a contractual relationship with a merchant acquirer for thesettlement of its credit card transactions.

The merchant acquirer is typically a financial institution which is amember of a Visa, MasterCard, or Discover card association. Thefinancial institution may enter into a contractual relationship with anISO, MSP or third party processor to outsource its obligation to theassociations. Merchants typically select a merchant acquirer to providecustomer service, to offer reporting, to offer settlement services andmake daily deposits, to provide chargeback and retrieval services, toinstall point-of-sale equipment or software that can be leased orpurchased, train the merchant's staff in the use of the equipment,access a credit card network for authorizations of credit cardtransactions, and ultimately process the merchant's credit cardtransactions. The merchant acquirer may offer the merchant processingservices itself or outsource some or all of its merchant processingservices to an authorized third party provider of merchant processingservices.

There are typically three institutions involved in processing creditcard transactions, the acquiring bank, an issuing bank, and a cardassociation. Well known card associations include, for example, Visa,MasterCard and Discover.

The acquiring bank typically has a merchant processing relationship witha card association such as Visa, MasterCard or Discover, and isconsidered a member bank authorized to set up merchant accounts directlywith merchants. An ISO or MSP offering merchant processing services musttypically be sponsored by a member bank to market and sell merchantprocessing services to merchants on behalf of the member bank.

The issuing bank is the financial institution that issues a credit cardto a cardholder that purchases goods and services from merchants. Anissuing bank may issue different card types such as Visa, MasterCard orDiscover to various market segments and card type categories such asconsumer, signature debit, pin debit, rewards, commercial, business,prepaid, and check card.

The card associations typically operate between the acquiring bank andissuing bank to facilitate the large number of credit card transactionsoccurring on a daily basis. The typical credit card transaction beginsat the point of sale where the cardholder has selected certain goods orservices to purchase. The merchant typically enters the credit cardnumber by swiping the card through a point-of-sale terminal to readinformation stored on the magnetic strip or manually enters the bankcard number directly into the point-of-sale terminal or other electronicdevice. The point-of-sale terminal is connected to a computer creditcard network which electronically links the merchant to the acquiringbank or merchant processing provider. The acquiring bank iselectronically linked to the card association and the card associationis electronically linked to the issuing bank. The network allows themerchant to verify the consumer has available credit to obtain goods orservices they are attempting to purchase. The network allows formerchants to settle their point of sale device, thereby, ensuring themerchant will receive monies owed to them by the issuing bank.

In actual business practice, there can be variations and exceptions tothe above described set up. For example, the acquiring bank and theissuing bank may be one in the same. Moreover, the acquiring bank andissuing bank often contract out one or more of the above supportfunctions to independent sales organizations, member service providersor third party processors. The merchant processors operate and functionon behalf of the bank to complete the transaction for the merchant andcardholder.

Various transaction fees are associated with the provision of merchantprocessing services for credit card transactions, and are well known inthe art. Among these transaction fees are processing fees of theacquiring bank and merchant processor, interchange fees paid to theissuing bank, and assessment fees paid to the card association. Eachtime a credit card transaction is processed, the transaction fees areincurred by the merchant.

As known in the art, merchants may be charged any number of fees bymerchant acquirers including a setup fee for each merchant account, amonthly rental or lease fee for the point of sale equipment or software,a percentage fee on each transaction, a per item transaction fee foreach transaction, a per item authorization fee for each transaction, amonthly maintenance fee for each account, and a monthly minimum discountfee. Each of these fees varies from one merchant acquirer to the nextand from one transaction to the next.

Such transaction fees could also encompass a discount expense, surchargeexpense, assessment fee, monthly minimum fee, monthly authorization fee,pin debit fee, monthly batch fee, customer service fee, statement fee,application fee, membership fee, chargeback fee, retrieval fee,automated clearinghouse (ACH) fee, payment card industry (PCI)certification fee and an annual PCI fee.

A discount rate is typically the percentage charged to the merchant bythe acquiring institution on either net or gross credit card volumegenerated by the merchant for goods and services sold. The discount ratewill typically include interchange and assessment expenses.

The true management of the discount rate by the merchant is seldomevaluated when shopping for a new merchant processing relationship. Forexample, the minimum interchange rate a merchant can pay is typically1.15% and the maximum interchange rate is typically 2.81%. This leaves a1.66% variance the merchant can manage. Most merchants do not have thetime, resources or complete understanding of how their credit card feestructure is administered.

The interchange fee paid by the merchant is based on a rate establishedby the card associations (Visa, MasterCard and Discover) that is paid bythe acquiring bank to the issuing bank as compensation for expensesassociated with processing a credit card transaction. Interchange ratesvary according to type of card being used by the cardholder and that ofthe merchant (e.g., retail, travel and entertainment, mail order) andthe method of processing (e.g., paper, electronically via apoint-of-sale terminal).

The process of applying a particular interchange rate to a credit cardtransaction is known as qualification. However, as the transactioncharacteristics vary from the qualified or partially qualifiedqualification criteria in a pass through, bundled or tier pricing plan,the interchange fee applied to the transaction will increase. Theincrease in the interchange fee helps offset the added risk or pay foradditional cardholder benefits provided by the issuing institution. Theinterchange rates considered to be qualified vary by merchant type, typeof card product being used, the manner in which the merchant submittedinformation to the acquirer, the amount and type of information beingpassed by merchant to acquirer, and the geographical location of themerchant. A partially qualified or non-qualified transaction may includethe sales associate manually entering the credit card number rather thanswiping the card.

Interchange qualification is difficult to understand in part becausethere are so many different factors considered for each transaction.Some are based on the merchant's retail industry status, some on thetype of card product being presented for payment, some on the processused by the merchant to gain authorization for the transaction, some onthe type of information received, and many on a combination of thesefactors. The interchange qualification and thus the interchange ratecharged may depend, for example, on whether the credit card is processedelectronically from the magnetic strip on the back of the card (swiped),manually by the merchant based on the information set forth on the card,or manually by the merchant based on information provided by theconsumer over the telephone. In short, the number and complexity ofthese factors make it difficult for a merchant to know what its actualmonthly expense will be for merchant processing services.

Interchange fees are also based on various interchange categories, suchas retail, hotel, supermarket, gas station transactions, assigned toeach credit card transaction. Each transaction may be assigned to one ofseveral hundred different interchange categories. Understanding thesedifferent interchange categories can be quite difficult for merchants,often resulting in merchants incurring charges much greater than itanticipated for its merchant processing services, or at least notknowing the actual amount of fees it will incur each month for itsmerchant processing services. These interchange categories are numerousand difficult to understand in part because there are so many differentkinds applied.

The amount of transaction fees are further complicated by the variety ofcard products a card association or issuing bank may offer. For example,Visa and MasterCard typically offer a range of card products such asconsumer cards, check cards, corporate cards, business cards, pin debitcards, rewards cards, prepaid cards and so on. Each card product may besubject to different rules and regulations regarding the use,acceptance, and processing of the card product.

Merchant sales representatives of acquirers, banks, financialinstitutions, merchant processors, ISOs and associations typicallysolicit and sell merchant processing services. The traditional methodsfor selling merchant processing services include but are not limited todirect merchant solicitations and quotations for such services.

The process is highly competitive and diverse among salesrepresentatives and thus renders it difficult for merchants to easilycompare multiple quotations from different sales representatives eachcontaining numerous rates and fees for the merchant processing services,or to understand the actual expenses that will be incurred by itsbusiness under each quotation.

Most merchants tend to rely on a quoted bundled rate, buy rate, ortiered rate from their acquiring bank or merchant processor whencomparing processing alternatives. A bundled rate is typicallyconsidered a buy rate and can also encompass a tiered rate. The bundledrate, buy rate, or tiered rate is typically the sum amount ofinterchange, assessment fees and the processing fees bundled into asingle percentage rate and per item fee.

Over 20% of all credit transactions, however, never receive the quotedbundled rate, buy rate, or tiered rate because the transaction did notqualify at the qualified interchange rate. Instead those transactionsare downgraded to a partially qualified or a non-qualified rate in abundled or tier pricing plan. The downgrades can easily add anadditional half percent to the merchants overall credit card processingexpense and in some cases it is as high as a full one percent. Thismeans that a merchant can end up paying an additional fee ranging fromseveral hundred dollars to thousands of dollars in unforeseen annualexpenses.

In an interchange pass through pricing plan method offered by salesrepresentatives, the merchant pays the published interchange rate andassessments by the associations. The merchant also pays for other fees,such as fees for authorization, processing, statements, and chargebacks.Typically, the, interchange pass through method applies transaction feesby adding a small percentage or mark-up to the actual interchange ratefor every transaction. This ensures that a merchant only pays the actualinterchange rate plus the mark-up that goes to their merchant serviceprovider.

A bundled rate pricing plan method may also be offered by a salesrepresentative, which method typically combines most applicable fees,such as the interchange rate paid to the issuer, assessments to the cardassociations, and processor fees paid to the merchant processor, into asingle percentage rate and single per item fee referred to as a discountfee or discount rate, thus effectively hiding the actual processing feesthat make up the bundled rate from the merchant. The discount fee isthus typically the fee charged on the total amount of the gross or nettransaction. The bundled rate pricing method could also encompass atiered rate pricing plan. Other pricing methods could also be offered tomerchants by sales representatives.

With conventional methods of quoting merchant processing services tomerchants, the merchant does not know the precise fees being charged orwhat its estimated monthly expenses will be for each quotation. With thenumerous fees and various pricing schemes, businesses are easilyconfused about the prices involved with regard to acquiring merchantservices. Different merchant acquirers often provide pricing proposalsthat are vague and inconsistent, creating confusion when a merchant isshopping around for the lowest price for merchant services.

Moreover, conventional quotations to merchants for merchant processingservices typically do not provide a merchant with adequate informationregarding whether the financial institutions and merchant processorsbidding on its merchant processing services actually providesatisfactory customer service and technical support to the merchant.

Sales representatives, in turn, are faced with rising interchange rates,increased sales and marketing expenses, and eroding profit margins. Itthus has become necessary for merchant sales representatives, processorsand banks to look towards alternative means to generate affordable leadgeneration opportunities for merchant processing services.

Conventional methods of selling merchant processing services do notprovide sales representatives with access to a large number of merchantleads, the ability to efficiently submit quotations to a large number ofmerchants seeking merchant processing services, or the ability toinstantaneously and efficiently determine and analyze criticalinformation regarding its breakeven rate, monthly net revenue, or themerchant's monthly savings associated with each bid proposal.

Nor do conventional methods provide the sales representative with theopportunity to instantaneously, efficiently and effectively adjust itsbid proposal in relation to other bid proposals in order to provide themerchant with its most competitive bid while ensuring that its bidproposal stays within the financial parameters of managing its ownbusiness of selling merchant processing services.

Web based reverse auctions for selling products and services over acomputer system are known in the art, as described for example in U.S.Pat. No. 6,647,373 to Carlton-Foss. In such systems, electronic reverseauction information is typically transmitted over an electronic networksuch as the Internet and the reverse auction system is able to securelyreceive bids electronically from a plurality of proposers, rank thereceived bids using a plurality of criteria, and electronically provideresulting information to requesters and bidders.

In contrast with the typical “forward” auction, the dimensions forselecting a winning bidder are typically not just best price, butinclude a variety of additional dimensions, such as the brand andquality of the merchandise proposed, the timeliness of delivery, and thequality of service. In reverse auctions, therefore, the best pricedoffer may not be the eventual winning bid. The requestor of goods andservices may also select two or more of the top bidders with whom toenter a negotiation. Thus, the winning bidder at the completion of theauction may not be the eventual winner of the business contract.

U.S. Patent Application 2008/0120194 to Juras et al. describes a methodof assisting businesses in acquiring merchant services by providingmerchants at least one competitive acquirer rate through a computerprogram and network such as the Internet. Such method does not calculateand provide the merchant with the estimated monthly expense for itsmerchant processing services associated with the competitive acquirerrates provided or rank the competitive quotes based on qualitativefeedback of other merchants that have used the merchant processingservices of such merchant acquirers. Nor do such methods provide themerchant sales representatives with pricing models to determine theprofitability of their quoted rates or change in value of their merchantaccount portfolio as a result of acquiring such merchant at therespective quote, or the ability to change their respective quotes inreal-time in response to quoted rates from other merchant salesrepresentatives.

Prior art systems do not provide a comprehensive online bidding andsales management system that provides merchants with an estimatedmonthly expense associated with its merchant processing services foreach proposal from merchant sales representatives, and a ranking of suchproposals based on qualitative feedback from prior merchants that haveused the proposed merchant processing services. Merchants cannoteffectively and efficiently make a one to one comparison of bidproposals for merchant processing services in order to select the mostcompetitive proposals for the best merchant processing services.

Prior art systems do not provide a comprehensive online bidding andsales management system that provides merchant sales representativeswith the ability to calculate and analyze the profitability and savingsassociated with its merchant processing proposals and the value of itsmerchant account portfolio through various macro and micro pricingmodels and portfolio valuation models as well as the ability to changeits proposal for merchant processing services in real-time in responseto more competitive proposals and better ranking of other merchant salesrepresentatives.

SUMMARY OF THE INVENTION

Embodiments of the invention provide a comprehensive online bidding andsales management system and method for merchant processing services. Thesystem enables the merchant sales representative of acquirers, financialinstitutions, merchant processors, independent sales organizations andassociations to actively submit bids to merchants for merchantprocessing services over the Internet through an online auction program.Merchants using the system can obtain multiple bids for merchantprocessing services from merchant sales representatives that areautomatically ranked by the system based on the best overall price(estimated monthly expense to merchant) and a feedback weighting that isdetermined by the system based on sales representative feedback ratingsprovided by merchants using the system.

Encompassed in the comprehensive system are various features andfunctionalities which facilitate the online bidding and sales managementof merchant processing services. The system provides an online auctionprogram to merchants and sales representatives for merchant processingservices, as well as various merchant processing pricing models,reference materials, business credit cards, working capital, equipmentleasing, equipment purchasing and payroll processing.

The primary function of the system is focused on merchant processingservices for credit cards and other bank cards, and encompasses settingup a merchant account to accept Visa, MasterCard, American Express, andDiscover.

Utilizing the system, merchants can open up a bidding window from fiveto ten days, for example, all from a personal computer, thus eliminatingthe need for setting up face to face meetings with sales representativesto review and analyze their bid proposals.

The sales representative is able to electronically submit quotes or bidproposals to hundreds of merchants during an online bidding auction.

The system takes all the bids that a merchant may choose to receive,from 5 to 500, for example, and then automatically calculates the amountof money the merchant will spend on a monthly basis (estimated monthlyexpense) for its merchant processing services for each bid. The processtakes into consideration approximately 17 various billing fees that amerchant is assessed by the acquiring bank or merchant processor, thetype of pricing plan being offered such as interchange pass through or abundled rate pricing method which could encompass a tiered rate pricingmethod, the blend of cards that are accepted for consumer cards, checkcards, and rewards cards and the blend of Visa, MasterCard, Discover andAmerican Express cards that the merchant will accept.

The system also automatically determines the qualified, partiallyqualified and non-qualified blend for all card types accepted by themerchant and then calculates the appropriate interchange qualificationlevels for each card type based on as many as 300 various permutationsthat might apply (e.g., card present, card not present, pin entered,etc.) to come up with one estimated monthly expense for each bid.

The system distills all bid proposals down to one estimated monthlyexpense that the merchant will pay the acquiring bank or merchantprocessor for its merchant processing services. The system provides astandardized bid proposal and thus levels the playing field between allsales representatives and provides the merchant with an accurateone-to-one comparison of estimated monthly expenses for its merchantprocessing services. The system removes the uncertainty and guessinginherent in conventional sales quotes as to which proposal is better andwhat the merchant's monthly expenses might be.

Utilizing the system, the merchant is able to view online a standardizedbid proposal on all the bids that it receives from sales representativesincluding, for example, all fees, who provides customer service, who themerchant processor is, whether fees are settled daily or monthly, theterm of the agreement, and the early termination fee. The merchant canthus view or print the standardized bid proposal and make a one to onecomparison of bid proposals on pricing and services.

The system also allows the merchant to compare the level of customer andtechnical support being offered by the acquiring banks and merchantprocessors who are bidding on the merchant processing services of themerchant business. Previous merchants who have used the system providequalitative feedback on the acquiring banks and merchant processors thatthey have selected as a winning bidder to provide its merchantprocessing services. This data is collected and used to facilitate a bidranking process.

Based on the sales representative bidder's overall pricing and feedbackscore, the system will automatically determine the sales representativebidder's overall bid ranking, ranking the best to the lowest bidder forthe merchant. For example, a sales representative bidder may have thebest overall price; however, its overall feedback weighting based on itsratings in eight qualitative categories may be very low; therefore, thesystem will apply a lower bid ranking to the bidder based on itsfeedback weighting.

The sales representative is able to monitor its bid ranking compared toother merchant sales representatives on an open bidding summary screen,and to change its bid proposal at any time during an auction in order toimprove its bid ranking. During an auction, the sales representativedoes not know the estimated monthly expense of other salesrepresentative's bid proposals, but only its bid ranking in comparisonto other sales representative bid proposals. The sales representative isthen able to view a pending bidding summary to see if it has beenselected as a top bidder by the merchant.

The system will also automatically calculate and show the merchant salesrepresentative its estimated revenues and processing expenses, andprovides various merchant processing pricing models to the salesrepresentative including both a macro pricing model and micro pricingmodel, which could also be referred to as distinct acquiring processingpricing models.

The macro pricing model enables the merchant sales representative toview the various interchange categories (e.g., retail, hotel,supermarket, gas station transactions) and enter information todetermine its breakeven rate to quote or bid based on the interchangecategories, its monthly net revenue and the merchant's estimated monthlysavings. The model is designed so that the merchant sales representativecan quote a bundled rate/tiered rate or an interchange pass throughpricing method.

The micro pricing model enables the merchant sales representative togenerate or modify its processing expenses and quoted expenses to themerchant and then view the results in terms of monthly revenues,spreads, and merchant processor revenues. The micro pricing model alsoenables the sales representative to compare various pricing methods suchas an interchange plus to a bundled rate, buy rate or tiered rate methodor a bundled rate, buy rate, or tiered rate method with an 80% revenueshare to a flat buy rate method, in many different scenarios in order toevaluate which acquiring bank or merchant processor provides the bestpossible economic opportunity to the sales representative. The micropricing model allows for the percentage of revenue share to be 0 to 100percent.

The system also provides a statement analysis model which enables themerchant sales representative to enter a merchant's current merchantprocessing statement and the sales representative's own pricing for eachof the current billing elements. The statement analysis model will thenautomatically calculate the savings in dollars terms and percentages,which can then be presented to the merchant.

The system provides a portfolio valuation model which enables themerchant sales representative to determine the value of its portfolio ofmerchant accounts or how much it would spend to acquire a merchantportfolio from another sales representative.

The system further provides a pin debit model which provides a salesrepresentative with a calculation of the total cost per transaction andrelated fees associated with various pin debit card networks based on anaverage ticket and monetary code selected by the sales representative.An average ticket represents the average dollar amount of each creditcard transaction for a merchant.

BRIEF DESCRIPTION OF THE DRAWINGS

For the invention to be clearly understood and readily practiced, theinvention will be described in conjunction with the following figures,wherein like reference characters designate the same or similarelements, which figures are incorporated into and constitute a part ofthe specification, wherein:

FIG. 1 is a block diagram illustrating the components of thecomprehensive online bidding and sales management system according toprinciples of the invention;

FIGS. 2A and 2B illustrate an example merchant registration form;

FIGS. 3A to 3 f illustrate an example sales representative registrationform;

FIGS. 4A to 4C illustrate an example of a standardized bid proposalgenerated by the system;

FIGS. 5A and 5B illustrate a flow chart depicting an exemplary auctionand the interplay between a merchant bid request and various bidproposals from sales representatives;

FIG. 6 illustrates an exemplary bid ranking calculation;

FIGS. 7A and 7B illustrate an example of a macro pricing model;

FIGS. 8A to 8 f illustrate an example of a micro pricing model;

FIG. 9 illustrates an example of a statement analysis model;

FIG. 10 illustrates an example of a portfolio valuation model; and

FIG. 11 illustrates an example of a PIN debit model.

DETAILED DESCRIPTION OF THE INVENTION

It is to be understood that the figures and descriptions of theinvention have been simplified to illustrate elements that are relevantfor a clear understanding of the invention, while eliminating, forpurposes of clarity, other elements that may be well known. Those ofordinary skill in the art will recognize that other elements aredesirable and/or required in order to implement the invention. However,because such elements are well known in the art, and because they do notfacilitate a better understanding of the invention, a discussion of suchelements is not provided herein. The detailed description will beprovided herein below with reference to the attached drawings.

Referring to FIG. 1, the system 100 includes a computer 102 connected toan electronic network such as the Internet and at least one merchantcomputer (not shown) and at least one sales representative computer (notshown) via the electronic network. In a preferred embodiment, the system100 is maintained at a web site available on the Internet through aserver that may be accessed by various users including merchants andsales representatives. Each merchant or sales representative may usetheir own personal computer connected to the Internet and accessible tothe system 100 through conventional web browsing software. The merchantand sales representative computers are non-limiting and could includeany computer-based device or Internet-enabled device capable ofaccessing the Internet such as desktop computers, laptop computers,personal digital assistants (PDAs) and cell phones.

System 100 has computer 102 as its central hub, and computer 102 can beany type of computer system or web server capable of running oroperating the system 100 web site according to methods well known in theart. Typically, a web site is hosted on a computer system known as a webserver or HTTP server and includes the program, software, and databasesto operate the web site and retrieve and deliver web pages in responseto requests from web site users, and to process and store data that maybe input by the users and shown on the web pages. The computer 102includes an auction program 104 and at least one database 106 forstoring data. The auction program 104 encompasses the source code and/orsoftware that permits the computer 102 to operate and implement thefeatures and functions of the system 100.

At the system 100 website, the merchant and sales representative arepresented with a series of screens, tabs, drop-down menus, and links ascommonly known to guide them through the various components andfunctions provided by the system 100 through conventional mouse clicksand typing of entries into open fields where applicable.

The block diagram of FIG. 1 shows the various components of a preferredembodiment of the system 100, including, but not limited to thefollowing components as will be discussed in greater detail below: amerchant portal 108, sales representative portal 110, feedback 112,macro pricing model 114, micro pricing model 116, statement analysismodel 118, portfolio valuation model 120, pin debit model 122, equipmentleasing module 124, equipment purchases module 126, business credit cardmodule 128, working capital module 130, payroll processing module 132,merchant reference material module 134, sales representative referencematerial module 136, legal resource module 138, and administrativeportal 140.

Merchant Portal

To utilize the merchant portal 108, a merchant creates a merchantregistration or profile by creating a username and password andcompleting a merchant registration form. This can be accomplished, forexample, via a new merchant link on the system 100 web site. Onceregistered, merchants can login, access and utilize the features andfunctions available through the merchant portal 108.

During merchant registration, the merchant enters information about itsbusiness necessary to create and submit a bid request via the auctionprogram 104 of system 100 and for the system 100 to generate and processany bid proposal submitted in response to the bid request.

Another reason for the information is to provide the salesrepresentatives with sufficient details to provide an accurate andcompetitive bid proposal. The merchant information is stored in thesystem database 106 and none of the potential bidders receive merchantidentifying information such as business name, phone number or contactinformation of the merchant until the merchant selects the top bidders,which could typically be the top five to ten sales representative bidproposals.

FIGS. 2A and 2B illustrate an exemplary merchant registration 200 andthe information requested by the auction program 104 regarding themerchant. The information collected includes correspondence andcommunication background information 202. This is general informationregarding the merchant's login password and business information such asthe business name, owner, and business contact information. Alsoprovided is general background information 204 such as the type anddescription of the merchant business, credit rating, type of creditcards the merchant business currently accepts or would like to accept,current merchant processor if applicable, and the reasons for seeking anew merchant processor relationship.

With respect to the reasons for seeking a new merchant processorrelationship in general background 204, the merchant is able to rank orassign a value or weight to various qualitative categories of potentialsignificance to the merchant. In a preferred embodiment, this mayinclude (1) lack or professionalism (training/implementation), (2)terminal and software problems, (3) difficult to read and reconcilemerchant statement, (4) require a more competitive rate, (5) fundingdelays, (6) poor customer and technical service, (7) difficult tobalance daily reports, and (8) system uptime and reliability are issues.

The merchant registration 200 also includes credit card information 206with respect to the merchant business. This includes the percentage ofcards present at the time of sale, such as, swiped bank cardtransactions, versus transactions generated by mail, phone or theinternet, such as, non-swiped bank card transactions; the type of pointof sale equipment and software utilized by the business; the percentageof credit card transactions generated from purchase cards, commercialcards, and business cards; the monetary code and SIC code anddescription of the merchant business; annual business revenues, totalmonthly credit card sales volume, and average ticket size.

As shown in FIGS. 2A and 2B, once the credit card information 206 isentered, the merchant can click on a calculate tab 208, and the system100 will then calculate various merchant credit card data 210 includingthe total monthly sales volume, average ticket size, total monthlytransaction volume, monthly dollar volume that will be downgraded topartially qualified, monthly dollar volume that will be downgraded tonon-qualified, the percentage of returns, exchanges and credits, thechargeback percentage, and total number of voice authorizations or autoresponse unit (ARU) authorizations. The merchant also has the ability tomodify or change any of the automated fields that are populated by thesystem to further refine the parameters.

Through merchant registration 200, the merchant is also able setpreferred auction options 212 such as how long the bidding window shouldremain open, the number of sales representative bidders the merchantwould like to be contacted by following the auction, whether anyparticular settlement bank, MSP, or merchant processor should beexcluded from the auction, and any geographical location requirementsfor its sales representative.

The completed registration 200 provides the data necessary to initiatean auction and request bid proposals for such business. The merchantalso has the option to create new company or business profiles on whichto receive bid proposals by clicking on a link and providing the sameregistration information for other companies or businesses of themerchant.

Referring back to the merchant portal 108 of FIG. 1, once registered andlogged in, the merchant has access to the merchant portal 108 homepageand the various features and functions of the system 100 including theauction program 104 and other merchant account processing products suchas merchant reference material 134, and the business credit card module128, working capital module 130, and payroll processing module 132.Merchants can also review various features of the system 100 such assample proposals, sample auctions, and merchant registration, and referothers to the system 100 web site.

Utilizing the auction program 104 available through the merchant portal108, the merchant can initiate an auction by submitting a request forbid proposals. The merchant can also view active bid proposals receivedfrom sales representatives including open bid proposals, pending bidproposals and winning bid proposals, discontinue or delete an auction,and view and award bid proposals based on the estimated monthly expensesand bid ranking of each bid proposal determined by the system 100.

During an auction, the merchant has the option to view the details ofeach bid proposal, select one or more top bidders or a winning bidder,discontinue the bid request or allow the auction to continue so as toreceive additional bid proposals from other sales representatives, or toallow the sales representatives that have already submitted bidproposals to modify and improve their bid proposals in consideration ofthe other bid proposals including the current bid ranking and estimatedmonthly expenses of such bid proposals.

During an auction, the merchant will typically select the top five toten bidders, resulting in the release of the merchant's business name,owner's name, phone number and contact information to the selected topsales representative bidders so that they can contact the merchant toanswer any additional questions from the merchant regarding theirmerchant processing services. The merchant will also have the ability toview the contact information of each top sales representative bidderselected.

In a preferred embodiment, approximately thirty days from selecting thetop five or more bidders, the system 100 will send an email to themerchant requesting confirmation of the winning bidder selected toprovide its merchant processing services. The system 100 will alsorequest that the merchant complete and submit feedback 112 regarding thewinning bidder selected, which will then be utilized by the system 100in ranking bidders during subsequent auctions and assist other merchantsin evaluating bidders and their bid proposals. The merchant can loginand select a link to submit feedback 112 on the sales representative ofthe winning bid proposal.

In a preferred embodiment, merchants are requested to provide feedback112 on eight qualitative categories including (1) professional salesrepresentative (2) easy to use terminal/software, (3) easy toread/reconcile monthly merchant statement, (4) offered competitive ratewith no hidden fees, (5) receive daily deposits in a timely manner, (6)customer and technical support, (7) able to balance daily deposits andreporting, and (8) implementation and training. The merchant is able toselect a subjective value of 1 through 8 to each qualitative categorybased on the merchant's experience in utilizing merchant processingservices of the particular sales representative whose bidding proposalwas selected as the winner.

The system 100 will automatically determine a bid ranking of each bidproposal submitted by sales representatives based on the estimatedmonthly expense of the bid proposal calculated by the system 100 and anoverall feedback weighting calculated by the system 100 from feedback112 provided by merchants.

Sales Representative

To utilize the sales representative portal 110, the sales representativecreates a sales representative registration or profile from the system100 website by creating a username and password and completing a salesrepresentative registration form.

FIGS. 3A to 3F illustrate an example sales representative registration300 and the information collected regarding the sales representative andits business. The information collected includes the salesrepresentative's correspondence and communication information 302,including information regarding the sales representative's loginpassword and business details such as the business name, salesrepresentative name, and contact information. Also provided is the salesrepresentative's billing information 304 for which the system 100 canuse to electronically debit fees associated with the salesrepresentative's subscription and use of the system 100.

The sales representative registration 300 further includes Visa,MasterCard and sponsoring information 306 of the sales representativebusiness and whether the business is a registered ISO or MSP, as well asgeneral company background 308 about the business and individual salesrepresentative. The sales representative then provides its merchantprocessing demographics 310 which includes identification of its primaryand secondary settlement bank, authorization provider, settlementprocessor, and the organization that will provide the customer andtechnical support services to the merchant. Also included in themerchant processing demographics 310 is information regarding thepercentage of chargebacks handled without merchant involvement and thosereversed back to the issuing bank and early termination fee. The salesrepresentative is also able to set preferred auction options 312 such asany SIC codes or locations that it would like to exclude as potentialmerchant opportunities.

The next part of the sales representative registration 300 collectsdetailed information regarding the standard rates and fees charged bythe sales representative to merchants for merchant processing services.This detailed information is used by the system 100 to automaticallygenerate bid proposals and to automatically populate and generate thevarious merchant processing pricing models available to the salesrepresentative.

In a preferred embodiment, the various fees and rates are categorized bywhether the credit card transaction is a swiped or non-swipedtransaction through a point of sale terminal or software, and whether abundled rate or interchange pass through pricing method is used. Foreach category, the various rates and per item fees for each type of bankcard and each interchange qualification level of qualified, partiallyqualified (mid-qualified) or non-qualified transaction is provided. Athird category for other fees is also provided.

As shown in FIGS. 3A to 3F, the detailed rates and fees entered into thesales representative registration 300 include the standard merchantswiped fees charged to the merchant 314. Under this category of fees, isshown various rates and fees for the categories of bundled rate 316 andinterchange pass through rate 318. For each type of credit card, therate and per item fee is provided as a qualified rate 320, standard markup on a partially qualified transaction 322, and standard mark up on anon-qualified transaction 324. Then, any other applicable other fees 326and applicable authorization fees 328 are provided.

The same type of rates and fees of the sales representative are providedwith respect to its standard merchant non-swiped fees charged to themerchant 3330 and the standard processor/swiped fees charged to thesales representative 332 and standard processor/non-swiped fees chargedto the sales representative 334.

The sales representative registration 300 also provides the option toutilize standard published rates and fees charged to merchants forcertain credit card transactions such as American Express and Diners, orpermits the sales representative to enter proposed fees for suchtransactions. On sales representative registration 300 this is shown as336 and 338.

Also provided on the sales representative registration 300 isinformation regarding the sales representative's share with its bank,merchant processor, or ISO 340. Here, the sales representative selectswhether it is charged a buy rate or interchange pass through by itsmerchant processor, and enters the percentage of the partially qualifiedand non-qualified mark up the sales representative receives and thepercentage charged the sales representative by the merchant processorfor risk assessment. The sales representative designates the amount ofrevenue that it will retain. The sales representative may also entertext relating to any features and benefits 342 it provides that it wouldlike to share with the merchants to which it submits a bid proposal.

The completed sales representative registration provides the datanecessary to submit bid proposals during an auction and to utilize thevarious merchant processing pricing models available to the salesrepresentative as set forth in greater detail below, which areautomatically generated by the system 100 based on the informationprovided during registration.

Referring back to FIG. 1, once registered and logged in, the salesrepresentative has access to the sales representative portal 110homepage and the various features and functions of the system 100including the auction program 104 and other system 100 components suchas the macro pricing model 114, micro pricing model 116, statementanalysis model 118, portfolio valuation model 120, pin debit model 122,equipment leasing module 124, equipment purchases module 126, workingcapital module 130, business credit cards module 128, and salesrepresentative reference material module 136. Sales representatives canalso view various features of the system such as sample bid proposals,sample auctions, and a sample sales representative registration.

Utilizing the auction program 104 available through the salesrepresentative portal 110, the sales representative can view an openbidding summary. This summary lists bid requests submitted by merchantsfor merchant processing services that are open for bidding. The merchantsales representative can select any number of bid requests frommerchants for which to submit a bid proposal. The system 100 willautomatically generate the bid proposal based on the salesrepresentative registration information and the registration informationprovided by the merchant. During an auction, the sales representativecan view submitted bids proposals, pending bids proposals, and winningbid proposals, submit and delete bid proposals, and review and modifyexisting bid proposals.

The merchant sales representative is able to change its bid while theauction is open in an effort to improve the estimated monthly expense tothe merchant based on its bid, and overall bid ranking based in part onsuch estimated monthly expense.

The sales representative has access to all of the various merchantprocessing pricing models for which to analyze and manage its bidproposals as well as its overall merchant processing services business,including the macro pricing model 114, micro pricing model 116,statement analysis model 118, portfolio valuation model 120, and pindebit model 122.

Each of the models can be used by the sales representative to analyzebid proposals during an auction or can be used by the salesrepresentative independent of the auction program 104 to analyzeconventional bid proposals and lead opportunities and to manage itsbusiness of selling merchant processing services.

Through the sales representative portal 110, the sales representativecan also view pricing plans for use of the system 100, detailed billingsummaries from its use of the system 100, and the sales representative'saverage feedback rating from merchants that have submitted feedback 112.The sales representative can also refer a friend to the system 100 website such as other merchants or sales representatives, viewtestimonials, and submit, terminate, or upgrade its contractualagreement for use of the system 100.

On a monthly basis, the system 100 will debit the sales representativeaccount for usage of the system 100 based on the number of merchantaccounts established using the auction program 104. Salesrepresentatives can be charged in any number or variety of ways,including an initial set up fee, followed by a flat monthly or annualfee, and a sliding scale fee for each merchant that is signed up formerchant processing services using the system 100. At month end thesystem 100 will provide summary and detail reporting to the salesrepresentative reflecting the monthly debit that will be initiated bythe system 100 to the sales representative's financial institutionindicated on the sales representative registration.

FIGS. 4A to 4C illustrate an example of a standardized bid proposal 400that is submitted by a sales representative to a merchant that hassubmitted a bid request for its merchant processing services. When asales representative clicks on a link to create and submit a bidproposal to a particular merchant request for bid, the standardized bidproposal 400 is automatically generated and populated with data from themerchant registration regarding its business and the salesrepresentative registration regarding its various transaction fees andmark up for submission to the merchant. The quoted fees on thestandardized bid proposal 400 can also be modified or updated by thesales representative prior to submitting the bid proposal, or any timeafter the bid proposal is submitted while the auction is still open.

From the merchant registration, the bid proposal 400 includes themerchant's business information 402 and reason for looking for a newmerchant account 404, the current and future credit card needs for themerchant 406, merchant credit card information 408, and merchantequipment, software, and sales information 410. From the salesrepresentative registration, the bid proposal 400 includes proposed feesbased upon information provided by the sales representative 412 under abundled rate method or interchange pass through method selected by thesales representative, American Express and Diners proposed fees to themerchant 414, estimated monthly expenses for bank card processingservice 416, sales representative feedback forum survey results frommerchants who have awarded bids to the sales representative 418, salesrepresentative name and contact information 420, sales representativeprocessing information 422, and any features and benefits 424 of thatsales representative. As shown in bid proposal 400, the salesrepresentative's name and contact information 420 is not provided to themerchant in the initial bid proposal. In a corresponding manner, themerchant's name and contact information 402 is not provided to the salesrepresentative viewing the initial bid proposal.

At the time the bid proposal is submitted, the system 100 automaticallycalculates an estimated monthly expense 426 for the merchant associatedwith the bid proposal and automatically determines the bid ranking 428for the bid proposal based on the estimated monthly expense and overallfeedback rating 430 for the sales representative that submitted the bidproposal.

Referring to FIGS. 5A and 5B illustrates a flow chart depicting anexemplary auction and the interplay between a merchant bid request andvarious bid proposals from sales representatives.

In a preferred embodiment of the exemplary auction, the merchantinitiates the auction by creating a bid request 500 and submitting itthrough the system 100 as a request for quote 502. The bid request 500is automatically generated and populated by the system 100 based oninformation provided in the merchant registration. The merchant can alsoupdate its merchant registration 504 and create a new bid request basedon the updated information or delete an existing bid request.

Once submitted, the bid request 500 becomes an active bid request 506for the merchant and it appears in the sales representative's open bidsummary 508. The sales representative can then view the bid request 500and create a standardized bid proposal 510. The bid proposal isautomatically generated and populated by the system 100 with thenecessary information based on the merchant registration and salesrepresentative registration, however, the sales representative may alsomodify any of its information in the bid proposal 524 prior tosubmitting the bid proposal. The merchant's name and contact informationis not provided to the sales representative in the bid request 500 oropen bid summary 508 at this step.

The sales representative's open bid summary 508 also provides the salesrepresentative with summary information including the date the bidrequest was requested from the merchant and the date the bid requestcloses, the number of bids received by the merchant thus far in responseto the bid request, the merchant's city, state, and country, the totalcredit card monthly sales volume and transaction volume for themerchant, the average ticket for the merchant and a description of theproducts or services sold by the merchant.

Once the bid proposal is submitted, the system 100 automaticallycalculates the estimated monthly expense to the merchant, the bidranking, and the monthly net revenue to the sales representative basedon the bid proposal. The bid proposal then appears in the salesrepresentative's submitted bid summary 512 and the merchant's open bidproposals summary 514.

In the sales representative's submitted bid summary 512, the salesrepresentative can see its bid ranking and monthly net revenueassociated with its bid proposal along with the other summaryinformation provided in the open bid summary 508. The salesrepresentative can also utilize the macro pricing model, micro pricingmodel and statement analysis model associated with its bid proposal,view the bid proposal including the estimated monthly expense to themerchant, modify and update its bid proposal 524, or delete itssubmitted bid proposal 526 from the submitted bid summary 512.

In the merchant open bid proposals summary 514, the merchant is able toselect and view the bid proposals including its estimated monthlyexpense and the bid ranking of each bid proposal received. From themerchant's open bid proposal summary 514, the merchant is able to reviewall of the bid proposals received in response to its bid request 500including the estimated monthly expense and bid ranking associated witheach bid proposal, and then select one or more bid proposals 510 as topbid proposals.

The merchant open bids proposal summary 514 also provides the merchantwith other summary information including the date the bid request wasrequested and the date the bid request closes, whether the bid proposalis for a bundled or interchange pass through method, the qualifieddiscount rate for a consumer card transaction, the qualified per itemfee for a consumer card transaction, the authorization fee for aconsumer card transaction, the qualified discount rate for a check card,the qualified per item fee for a check card, the authorization fee for acheck card, the total credit card sales volume, and the city, state andcountry of the sales representative. In addition, the merchant can clickon a link to view the survey feedback rating of the sales representativeof any particular bid proposal from the merchant open bids proposalsummary 514. The merchant can also delete bid proposals 528 from theopen bids proposal summary 514.

Once one or more top bid proposals are selected, such bid proposalsappear in the merchant's pending bid proposals summary 516, where themerchant can review the bid proposals including its estimated monthlyexpense and the bid ranking of each bid proposal. The pending bidproposals summary 516 provides the merchant with the same summaryinformation provided in its open bid proposals summary 514 but also nowincludes the sales representative's name and contact information.

The respective bid proposals also appear in the pending bid summary 518of each sales representative whose bid proposal was selected as a topbid proposal. The sales representative is able to review the bidproposal 510 including the estimated monthly expense to the merchant andits bid ranking as well the macro pricing model, micro pricing model andstatement analysis model associated with its bid proposal. Themerchant's name and contact information is also provided to the salesrepresentative in the pending bid summary 518. The sales representativecan then contact the merchant to discuss the bid proposal and/or modifyand update its bid proposal 524 or delete its bid proposal 526 from thepending bid summary 518.

Any updated bid proposals submitted by the sales representative,including any newly calculated estimated monthly expenses and bidranking resulting from updated bid proposals will be reflected in themerchant's pending bid proposals summary 516.

From the merchant's pending bid proposals summary 516, the merchant canselect the winning bid proposal or discontinue the bid request. Ifselected as a winning bid proposal, the bid proposal appears in themerchant's winning bid proposals summary 520, and the winning bidsummary 522 of the sales representative whose bid proposal was selectedas the winner. Both the merchant and the sales representative are ableto review the winning bid proposal including the estimated monthlyexpense and bid ranking of such bid proposal, and the salesrepresentative is also able to review its macro pricing model, micropricing model and statement analysis model associated with its winningbid proposal. The merchant and sales representatives are also providedwith one another's name and contact information.

Once the winning bid is selected, the merchant is able to submitfeedback 530 on the sales representative, shown on FIG. 1 as 112.

Estimated Monthly Expense

The system 100 computes the estimated monthly expense for merchantprocessing service based on merchant bid request data and salesrepresentative bid proposal data.

The estimated monthly expense to the merchant is the sum of a discountexpense, surcharge expense, assessment, monthly minimum, monthlyauthorization, pin debit fee, monthly batch fee, customer service fee,statement fee, application fee, membership fee, chargeback fee,retrieval fee, monthly ACH fee, monthly PCI fee and a PCI annual fee.Determination of each of these fees is described below.

Discount Expense. The discount expense may be determined based on thebundled method/tiered method or the interchange pass through method. Thesales representative determines which pricing method they wish to use inits bid proposal.

Discount Expense—Bundled Method/Tiered Method. Under the bundledmethod/tiered method, the discount expense is equal to the qualifieddiscount expense by percent plus qualified discount expense per settleditem.

Qualified Discount Expense by Percent. The qualified discount expense bypercent (“QDEP”) is determined as follows:

QDEP equals the sum of monthly card type volume multiplied by the rate,where:

-   -   monthly card type volume equals the monthly volume of        transactions in dollars for a particular credit card type such        as Discover, MasterCard and Visa and for particular card type        categories such as consumer, signature debit and classic        rewards; and    -   rate equals the percent that the merchant sales representative        charges for each transaction by each credit card type. If the        merchant does not supply estimates of the monthly volume for        each credit card type used at the merchant's business, the        system 100 will assume 64% of the monthly card type volume is        Visa and 36% is MasterCard and it will also add 8% to the volume        if the user indicates that Discover is to be used.

The monthly card type volumes may be obtained from a table based onregion of origin and monetary code. The system takes all SIC codes andgroups them into 32 monetary code types (e.g. retail face-to-face, mailorder, car rental). For each monetary code type, the system has tablesof established percentages for volume of each card type (e.g., Visa,MasterCard and Discover), card type category (e.g., consumer, signaturedebit, and classic rewards), and interchange level (e.g., qualified,partially qualified, and non-qualified).

The system then applies a charge type code for each card type to assessthe most appropriate interchange category. In the United States, forexample, there are over 300 different interchange categories for Visa,MasterCard and Discover. For each monetary code type, the system of thepreferred embodiment assigns 27 charge code types to determine fees foreach card type of Visa, MasterCard and Discover (e.g., qualified Visaconsumer, partially qualified consumer, non-qualified Visa consumer) andeach charge type code has a corresponding interchange value forpercentage and per item fees. The system considers the region of origin(e.g., United States, Asia Pacific, Canada, Europe, Central and EasternEurope, and Latin America) in assessing the interchange values.

Qualified Discount Expense per Settled Item. The qualified discountexpense per settled item (“QDESI”) is determined as follows:

QDESI equals the sum of the monthly card type transactions multiplied bythe per item charge, where:

monthly card type transactions equals the number of monthly transactionsfor each credit card type such as Discover, MasterCard and Visa and forparticular card type categories such as consumer, signature debit andclassic rewards and further divided as to qualified, partially qualifiedor non-qualified; and

per item charge equals the amount in dollars (cents) the merchant salesrepresentative charges for each transaction of that type.

Discount Expense—Interchange Pass Through Method. Under the interchangepass through method, the discount expense is equal to the sum of eachmonthly card type volume (as defined above) and further divided as toqualified, partially qualified (mid-qualified) and non-qualifiedmultiplied by the interchange pass through rate, where:

interchange pass through rate equals the percent that the merchant salesrepresentative charges for each transaction type such as qualified,partially qualified or non-qualified.

Surcharge Expense. The surcharge expense is equal to the interchangesurcharge plus the per item surcharge.

Interchange Surcharge. The interchange surcharge is equal to the sum ofmonthly card type volume (as defined above) and further divided as topartially qualified or non-qualified multiplied by the mark-up rate,where:

mark-up rate equals the percent that the merchant sales representativecharges for each transaction type such as partially qualified ornon-qualified.

If the merchant does not supply estimates of the monthly volume for eachcredit card type used at the merchant's business, the system 100 willassume 64% of the monthly card type volume is Visa and 36% is MasterCardand will also add 8% to the volume if the merchant indicates thatDiscover is to be used.

Per Item Surcharge. The per item surcharge is equal to the per itempartially qualified surcharge plus the per item non-qualified surcharge.

Per Item Partially Qualified Surcharge. The per item partially qualifiedsurcharge is equal to the per item partially qualified totaltransactions for each card type multiplied by the per item partiallyqualified surcharge fee, where:

the per item partially qualified total transactions is the partiallyqualified monthly card type volume divided by the average price for thattype transaction.

Per Item Non-Qualified Surcharge. The per item non-qualified surchargeis equal to the per item non-qualified total transactions for each cardtype multiplied by the per item non-qualified surcharge fee, where:

the per item non-qualified total transactions is non-qualified monthlycard type volume divided by the average price for that type transaction.

Assessment. The assessment is equal to the pass through assessment plusthe per item assessment.

Pass Through Assessment. The pass through assessment is equal to thequalified monthly card type volume multiplied by the qualifiedassessment rate plus the partially qualified monthly card type volumemultiplied by the partially qualified assessment rate plus thenon-qualified monthly card type volume multiplied by the non-qualifiedassessment rate.

Per Item Assessment. The per item assessment is equal to the sum of thequalified per item assessment, the partially qualified per itemassessment and the non-qualified per item assessment, where:

the qualified per item assessment is equal to the total qualifiedmonthly card type transactions multiplied by the qualified assessmentfee for each such transaction. the total qualified monthly card typetransactions is equal to the qualified monthly card type volume dividedby the average dollar amount of such transactions.

the partially qualified per item assessment is equal to the totalpartially qualified monthly card type transactions multiplied by thepartially qualified assessment fee for each such transaction. The totalpartially qualified monthly card type transactions is equal to thepartially qualified monthly card type volume divided by the averagedollar amount of such transactions.

the non-qualified per item assessment is equal to the totalnon-qualified monthly card type transactions multiplied by thenon-qualified assessment fee for each such transaction. The totalnon-qualified monthly card type transactions is equal to thenon-qualified monthly card type volume divided by the average dollaramount of such transactions.

Monthly Minimum. The system 100 compares the monthly minimum fee quotedby the sales representative to the discount expense otherwise due. Ifthe quoted monthly minimum is higher than the discount expense, themonthly minimum fee is the quoted monthly minimum less the discountexpense.

Monthly Authorization. The monthly authorization is calculated the sameas the per item assessment (above) except that total monthly card typevolume transactions is multiplied by 1.10 and the cost per authorizationis used instead of assessment fee.

PIN Debit Fee. The PIN debit fee equals the qualified PIN debit fee.

The qualified PIN debit fee is equal to the total qualified monthly cardtype transactions multiplied by the qualified PIN debit fee pertransaction. The total qualified monthly card type transactions is equalto the qualified monthly card type volume divided by the average dollaramount of such transactions multiplied by the percent increase inauthorizations over settled items.

Monthly Batch Fee. The monthly batch fee equals the number of batchessubmitted per day, week or month multiplied by the fee per batch. Thiscalculation assumes there are 35 settled items per batch.

Customer Service Fee. The customer service fee equals the number ofmerchant locations multiplied by the monthly fee per location.

Statement Fee. The statement fee equals the number of merchant locationsmultiplied by the monthly fee per location.

Application Fee. The application Fee equals the application fee dividedby 12.

Membership Fee. The membership fee equals the annual membership feedivided by 12.

Chargeback Fee. The chargeback fee equals the number of settledtransactions per month multiplied by the chargeback percentagemultiplied by the chargeback fee per chargeback. The chargebackpercentage is the assumed percentage of chargebacks per month.

Retrieval Fee. The retrieval fee equals the number of settledtransactions per month multiplied by the retrieval percentage multipliedby the retrieval fee per retrieval. The retrieval percentage is theassumed percentage of retrievals per month.

Monthly ACH Fee. The monthly ACH (Automated Clearing House) fee equalsthe number of merchant locations multiplied by the daily ACH Feemultiplied by 20.

Monthly PCI Fee. The monthly PCI fee equals the number of merchantlocations multiplied by the PCI fee.

PCI Annual Fee. The PCI annual fee equals the PCI annual fee divided by12.

Bid Ranking

The system 100 determines and applies a bid ranking number to each bidproposal submitted by a sales representative for each respectivemerchant bid request.

The system 100 first calculates the estimated monthly expense for allsales representatives that submitted a bid proposal. The system 100 thentakes the lowest estimated monthly expense submitted by all salesrepresentatives and divides that number by the lowest estimated monthlyexpense submitted of each particular sales representative and assigns aweighting to all sales representatives based on their estimated monthlyexpenses. This value provided is the monthly estimated expenseweighting.

FIG. 6 is an exemplary illustration of the bid ranking calculation 600.In this example, the lowest estimated monthly expense 602 of the fourexemplary sales representative bid proposals shown in FIG. 6 is $2,000for sales representative three. Therefore, the monthly estimated expenseweighting 604 for sales representative one having an estimated monthlyexpense of $2,050 is 97.56% ($2,000/$2,050=97.56%).

The system next determines an average survey feedback forum rating 606for each sales representative by averaging the eight qualitativefeedback categories to arrive at a single value for each salesrepresentatives. The qualitative categories that are used to arrive atthe average are (1) professional sales representative, (2) easy to useterminal/software, (3) easy to read/reconcile monthly merchantstatement, (4) offered competitive rate with no hidden fees, (5) receivedaily deposits in a timely manner, (6) customer & technical support, (7)able to balance daily deposits & reporting, and (8) implementation &training.

Survey feedback ratings are received as feedback 112 from priormerchants for which each sales representative has been selected as awinner in the bidding process.

The system 100 then calculates a survey feedback forum weighting 608 bydividing the average survey feedback forum rating 606 by the totalpossible survey feedback forum rating, which in the preferred embodimentis eight. As shown in FIG. 6, the average survey feedback forum rating606 of sales representative one is shown to be 7.03, and therefore, thesurvey feedback forum weighting 608 of sales representative one is87.89% (7.03/8=87.89%).

To calculate the top ranking bid, the system 100 takes the surveyfeedback forum weighting 608 and multiplies it by a weighting factor of20%, for example, to get an interim survey feedback forum weightingvalue. The system 100 then takes the monthly estimated expense weighting604 and multiples it by a weighting factor of 80%, for example, to getan interim monthly estimated expense weighting value, and then adds theinterim survey feedback forum weighting value and monthly estimatedexpense weighting value to arrive at the total weighting 610 for eachbid proposal. The bid proposals are then ranked and given a bid ranking612 according to the total weighting 610 with the bid proposal havingthe highest total weighting 610 being the top ranking bid.

As shown in FIG. 6, sales representative one would have the top rankedbid proposal and a corresponding bid ranking 612 of number one. Theinterim survey feedback forum weighting value of sales representativeone is 17.58% (87.89%×20%=17.58%). The interim monthly estimated expenseweighting value of sales representative one is 78.05%(97.56%×80%=78.05%). Adding these two interim values together gives atotal weighting 610 of sale representative one equal to 95.63%, which isthe highest total weighting of all sales representatives.

Referring back to FIG. 1 and referenced above are the various merchantprocessing pricing models available to the sales representative throughthe sales representative portal 110, and which may be utilized during anauction to assist the sales representative in analyzing and managing itsbid proposals and business of selling merchant processing services.

Macro Pricing Model

The macro pricing model 114 enables the merchant sales representative toanalyze its merchant processing fees and expenses under various monetarycode types (e.g., retail, hotel, supermarket, gas station transactions).The sales representative enters information into the macro pricing model114 and the system 100 determines the sales representative's breakevenrate and monthly net revenue based on various interchange levels andvalues, and a merchant's monthly savings associated with a bid proposal.The model is designed so that the merchant sales representative cananalyze bid proposals based on a bundled rate or an interchange passthrough rate. The Macro Model is designed for a very quick estimate ofwhat a sales representative should quote a merchant and what the salesrepresentative can generate for revenue.

The thirty two monetary code types provided in the preferred embodimentof the system 100 and macro pricing model 114 include the following:Retail (Face to Face); Mail Order; Hotel; Supermarkets; Courts, Fines,Taxes; Restaurant; Cash Advance; Charities; Gas Stations; B2B (LargeTicket); B2B (Small Ticket); Insurance; Real Estate; Auto Dealers;Education (Continuing); Small Ticket <$15.00 (Taxi, Car Wash);E-Commerce/Internet; Car Rental; Telecom & Cable (Service Ind./Dev.Mkts); Utilities (Electric, Gas, Water, & Sanitary); Fast Food, Parking,Theater, Taxi; Health Care—Hospitals; Health Care—Doctors/Dentist; Pay @Pump (Automated Fuel); Entertainment (Parks, Golf Courses); Travel—OtherTransportation (Charter Service, Limo); Travel Operators; Travel Agents;Education (Schools/University/Colleges); Education—College Book Stores;Key Entered Miscellaneous Merchants; and ARU Miscellaneous Merchants.

As shown in the example in FIGS. 7A and 7B, the sales representativeenters information regarding the sales representative's expensevariables and processing assumptions 700, merchant pricing variables andprocessing assumptions 702, and merchant processing assumptions 704, andthe macro pricing model 114 compares the merchant's current pricing formerchant processing services 706 to the sales representative's proposedpricing 708, and calculates the effective break even rate 710, monthlyand annual revenue 712, net spread 714, and monthly and annual savingsto the merchant 716 associated with a bid proposal. The system assumesthat the sales representative must meet or beat the existing rate that amerchant is currently paying for its merchant processing services andcalculates the sales representative's revenue and breakeven rate basedon this.

The macro model allows the sales representative to quickly and easilydetermine the various interchange rates and per item fees associatedwith a qualified transaction 718, partially qualified transaction 720and non-qualified transaction 722 rate for that monetary code category.The sales representative can also compare and contrast interchange ratesbetween monetary codes for qualified, partially qualified andnon-qualified transactions.

Micro Pricing Model

A micro pricing model 116 enables the merchant sales representative toenter its merchant processing fees and expenses of a bid proposal to amerchant and then view detailed results in terms of monthly revenues,spreads, and merchant processor revenues.

There are approximately 50 different fields of data that can be loadedinto the micro pricing model 116 by the sales representative as shown inFIGS. 8A to 8F. Once registered on the system 100 as a salesrepresentative, the 50 fields of data will automatically populate whenthe merchant sales representative enters the micro pricing model 116based on the merchant processing information entered initially on thesales representative registration or information associated with a bidproposal during an auction. The sales representative, however, may alsomodify the data entered in the micro pricing model 116.

The micro pricing model 116 enables the merchant sales representative tocompare various pricing methods such as an interchange plus to a buyrate method or tiered rate method or a buy rate method or tiered ratemethod with an 80% revenue share to a flat buy rate program, in manydifferent scenarios in order to evaluate which bank or merchantprocessor provides the best possible economic opportunity to the salesrepresentative. The micro pricing model 116 allows the salesrepresentative to modify the revenue share from 0 to 100 percent.

Using the micro pricing model 116, the sales representative is providedwith a detail of its revenue potential for a bid proposal and canevaluate whether to pursue a merchant processing opportunity, pass on amerchant processing opportunity or modify a bid proposal, for example,from a bundled rate method to an interchange pass through method.

FIG. 8A to 8F illustrates an example of a micro pricing model 116. Themicro pricing model 116 includes data regarding merchant demographics800 which includes the merchant description corresponding to aparticular monetary code category, a SIC code for the merchant,percentage of swiped transactions, monthly credit card volume andaverage ticket size. The sales representative can hit a calculate tabfor the micro pricing model to automatically populate and return itsresults to the sales representative based on the merchant demographicsand the processing expenses and pricing provided in the salesrepresentative registration. This includes for example the monthlyvolume for Visa, MasterCard and Discover as to each card type, such asconsumer, signature debit, and rewards, and the volume of partiallyqualified and non-qualified transactions.

The data populated into the micro pricing model includes the feescharged to the merchant and other billing elements 802 provided by thesales representative and the fees and other billing elements charged tothe sales representative 804. The micro pricing model also includes datarelating to merchant demographics broken down by Visa, MasterCard,American Express, and Discover and card type 806.

Based on this data, the micro pricing model generates a micro monthlydetailed income statement 808 providing the sales representative withdetailed fees and revenues related to the merchant, sales representativeand processor associated with the sales representative. This includesvarious billing fees to the merchant, assessed fees to the salesrepresentative, gross revenue generated by the merchant, interchange andassessment fees, net revenue, sales representative revenue, andprocessor revenue broken down by card type and qualified, partiallyqualified and non-qualified transactions. Also included in the micromonthly detailed income statement 808 is a breakdown of processing orbuy rate percentages and various other fees. The micro monthly detailedincome statement 808 then totals the respective fees and revenues andbasis point spread and split percentage for the sales representative.

The micro pricing model also provides a micro monthly summary 810 to thesales representative showing the sales representative's monthly grossrevenue 812, expenses 814, and net revenue 816 with a summary breakdownof the various fees and expenses included in such results, such as ACHfees, batch fees, PCI fees, application fees and the like.

Statement Analysis Model

The statement analysis model 118 enables the merchant salesrepresentative to enter a merchant's current merchant processingstatement and the sales representative's own pricing for each of thecurrent billing elements. The statement analysis model 118 will thenautomatically calculate the savings in dollars terms and percentages,which can then be presented to the merchant. FIG. 9 illustrates anexemplary statement analysis model 118 showing the monthly savings 900,basis points savings 902 and annual savings 904 to a merchant inrelation to the bid proposal or pricing of a particular salesrepresentative.

To calculate the basis points savings, the system 100 adds up all theexpenses the merchant is currently paying and divides the total expensesby the credit card volume to arrive at a current bundled rate. Thesystem 100 then adds all the expenses the merchant would pay using thesales representative's bid proposal and divides the total expenses bythe credit card volume to arrive at an estimated bundled rate. Thesystem then subtracts the current and estimated bundled rates todetermine the basis points savings.

Portfolio Valuation Model

The portfolio valuation model 120 enables the sales representative todetermine how much its portfolio of merchant accounts is worth(portfolio value) or how much it would spend to acquire a merchantportfolio of another sales representative. FIG. 10 illustrates anexemplary portfolio valuation model 120 showing the cumulative totalrevenue of merchant accounts to be acquired 1000 and maximum payout foracquisition of the portfolio 1002.

Pin Debit Model

The PIN debit model 122 provides a sales representative with acalculation of the total cost per transaction and related feesassociated with various PIN debit card networks based on an averageticket and monetary code selected by the sales representative. FIG. 11illustrates and exemplary PIN debit model 122 showing the total cost pertransaction 1100 and related fees for various debit networks for aretail, face-to-face (e.g., swiped) transaction 1102 having an averageticket of $45 1104.

The PIN debit model is useful to the sales representative utilizing thesystem 100 because there are at least 12 PIN debit networks and all 12of them charge different percent and per item fees. The PIN debit modelprovides a sales representative with an accurate reflection of theestimated expense based on a weighted average of the PIN debit marketmix, and thus an indication of how much to charge in its bid proposal tocover the sales representative's interchange and switch expense. Theswitch expense is typically the cost that a debit network assesses amerchant processor to switch pin debit transactions onto and off of itsnetwork.

Equipment Leasing Module

The system 100 provides an equipment leasing module 124 for the salesrepresentative having a listing of merchant processing equipment andleasing pricing and terms, and an online leasing application form thatcan be submitted through the system 100 for leasing of such equipment.

Equipment Purchases Module

The system 100 provides an equipment purchase module 126 for salesrepresentatives having a listing of merchant processing equipment andpurchase pricing, and an online purchase application form that can besubmitted through the system 100 for purchase of such equipment.

Business Credit Card Module

Through the business credit card module 128, the system 100 may alsoprovide merchants and sales representatives with the ability to acquiresmall business credit cards, such as a Visa or MasterCard branded cardfor their own business card use. The business credit card module 128provides the merchant or sales representative with the option of variouscard types and the respective rates and fees associated with each cardtype, and an online credit card application form that can be submittedthrough the system 100 for such business credit cards.

The business credit card module 128 operates through a referralrelationship with a card issuer such that when a merchant or salesrepresentative utilizes the system 100 to apply and acquire a smallbusiness credit card, the card issuer of such card pays a fee for eachreferral generated by the system 100, and/or at least one basis pointbased on their annual volume and an additional one basis point on anymonthly outstandings.

Working Capital Module

Through the working capital module 130, the system 100 provides workingcapital advances and services to merchants, through a referralrelationship with one or more identified working capital providers. Thesystem 100 provides an online application form that can be completed andsubmitted through the system 100.

Payroll Processing Module

Through the payroll processing module 132, the system 100 providespayroll processing services to merchants, through a referralrelationship with one of 52 or more identified payroll providers. Thisfunctionality provides guaranteed accurate paycheck calculations to themerchant including all federal, state, and local taxes.

The merchant payroll can be automatically generated by the system 100.The merchant enters the hours and can print out its paystubs andpaychecks from the system 100 web site, or can offer its employeesdirect deposit service. The merchant can also easily export its payrolldata to QuickBooks®, Quicken®, or Microsoft® Money.

In a preferred embodiment, fees are charged by the system 100 once amonth, regardless of how many times the merchant is running payrollwithin that month. There is no extra charge for direct deposit,quarterly or year-end form filings (including W-2's).

To utilize the payroll processing module 132, the merchant logs into thesite, and the system 100 provides the merchant with a personal To Dolist that guides the merchant through each payroll task, from initialsetup of the merchant organization and employees, to paying employees,to all federal filings and deposits throughout the year, to W-2's. Inaddition, the system 100 will send email reminders to the merchant as tofederal tax deadlines.

The system 100 enables the merchant to make electronic federal taxpayments and federal filings. The merchant can pay federal taxes andsubmit federal form 940 and 941 electronically with a click whenever themerchant To Do list informs the merchant that such are due. At year-end,the merchant can print employees' W-2's and click to send governmentcopies to the SSA.

The merchant can view various payroll reports such as payroll details,workers' compensation wages, federal, state, and local tax liabilitiesand federal payments, deduction summaries. There are 12 different reporttypes that the merchant can export easily to Microsoft® Excel forcustomized reporting.

Unlike other payroll services, the system 100 does not impound funds fortaxes each payroll. The merchant maintains control of its funds, and thesystem 100 advises the merchant exactly what and when to pay and assiststhe merchant in effectuating such payments.

Merchant and Sales Representative Reference Material

The merchant reference material module 134 and sales representativereference material module 136 provide merchants and salesrepresentatives with various reference materials available in theindustry related to merchant processing services for their respectivebusinesses, such as various interchange descriptions and rates, variousoperating regulations for Visa and MasterCard, various merchantregulations for Visa and MasterCard, American Express and Discoverpricing and reference guides, SIC codes, and PCI/CISP regulations.

Legal Resource Module

The legal resource module 138 contains various legal disclaimers andagreements associated with the use of the system 100.

Administrative Portal

The administrative portal 140 permits a system 100 administrator tomanage and modify all aspects of the system 100 including each componentof the system as necessary for operation of the system 100, includingfor example, the system 100 users, tables, reports, and referencematerials. Through the administrative portal 140, an administrator canmanage and modify revenue and billing summaries and collection. Theadministrator can also restrict certain merchant types or particularmerchant or sales representative users.

The administrator can manage and modify various tables utilized by thesystem 100 such as SIC code tables, monetary code tables, the givenstable, and other tables relating to settlement banks, and Discover andAmerican Express rates. The administrator can further manage and modifythe various vendors through which the system 100 facilitates a referralrelationship, such as payroll processing, as well as the products,services and equipment available through the system 100.

The administrator can also generate summary reports from the systemdatabase not available to merchant and sales representative users, suchas a report of all bid finalists or pending bids of the various auctionson the system 100.

What is claimed is:
 1. A method, implemented at least in part with acomputing device, for evaluating a plurality of bids for merchantprocessing services, the method comprising: receiving, at the computingdevice, the plurality of bids for merchant processing services, whereinthe plurality of bids are associated with a plurality of bidders;determining a weighted total monthly cost estimate for each merchantprocessing services bid, wherein each weighted total monthly costestimate is determined by the computing device; determining a weightedfeedback score for each bidder, wherein each weighted feedback score isdetermined by the computing device; determining a ranking for eachmerchant processing services bid, wherein the rankings are determined bythe computing device and are based on the following: the respectiveweighted total monthly cost estimates; and the respective weightedfeedback scores.
 2. The method of claim 1, wherein receiving theplurality of merchant processing services bids comprises receiving, foreach merchant processing services bid, each of a plurality of differentexpenses and fees associated with the bid.
 3. The method of claim 1,wherein determining the weighted total monthly cost estimate for eachmerchant processing services bid comprises: determining a total monthlycost estimate for each merchant processing services bid; determining,for each total monthly cost estimate, a modified total monthly costestimate; and applying a weighting factor to each of the modified totalmonthly cost estimates.
 4. The method of claim 3, wherein determiningthe total monthly cost estimate for an individual bid comprisesdetermining a sum of all expenses and fees associated with the bid. 5.The method of claim 4, wherein determining the sum comprises determininga discount expense based on a pricing structure associated with the bid.6. The method of claim 4, wherein determining the sum comprisesdetermining a discount expense based on one of the following pricingstructures associated with the bid: a bundled rate pricing structure;and an interchange pass through pricing structure.
 7. The method ofclaim 6, wherein determining the discount expense comprises determining:a qualified discount expense by percent; and a qualified discountexpense per settled item.
 8. The method of claim 6, wherein determiningthe discount expense comprises determining: a sum of monthly dollartransaction volumes for each type of card; and an interchange passthrough rate.
 9. The method of claim 3, wherein determining the modifiedtotal monthly cost estimate for an individual bid determining themodified total monthly cost estimate based on a lowest total monthlycost estimate of all of the bids.
 10. The method of claim 3, whereindetermining the modified total monthly cost estimate for an individualbid comprises dividing a lowest total monthly cost estimate of all ofthe bids by the total monthly cost estimate for the individual bid. 11.The method of claim 3, wherein applying the weighting factor to anindividual modified total monthly cost estimate comprises multiplyingthe individual modified total monthly cost estimate by the weightingfactor.
 12. The method of claim 1, wherein determining the weightedfeedback score for each bidder comprises: determining a feedback scorefor each bidder; determining, for each feedback score, a modifiedfeedback score; and applying a weighting factor to each of the modifiedfeedback scores.
 13. The method of claim 12, wherein determining thefeedback score for an individual bidder comprises determining arespective score for each of a plurality of different feedbackcategories.
 14. The method of claim 12, wherein determining the feedbackscore for an individual bidder comprises determining an average ofrespective scores for each of a plurality of different feedbackcategories.
 15. The method of claim 12, wherein determining a modifiedfeedback score for an individual bidder comprises determining theindividual modified feedback score based on a number of differentfeedback categories utilized to determine the individual feedback score.16. The method of claim 12, wherein determining a modified feedbackscore for an individual bidder comprises dividing the individualfeedback score by a number of different feedback categories utilized todetermine the individual feedback score.
 17. The method of claim 12,wherein applying the weighting factor to an individual modified feedbackscore comprises multiplying the individual modified feedback score bythe weighting factor.
 18. The method of claim 1, wherein determining therankings comprises: for each respective bid, adding the associatedweighted total monthly cost estimate and the associated weightedfeedback score to form a total score for each bid; and comparing thetotal scores of the respective bids.
 19. The method of claim 1, furthercomprising storing the plurality of bids.
 20. The method of claim 1,further comprising transmitting at least one of the following: a totalmonthly cost estimate associated with an individual bid; and a rankingassociated with the individual bid.